The Pound Australian Dollar exchange rate held steady this morning as UK business confidence continues to grow ahead of July 19, when lockdown restrictions are due to be lifted throughout England. According to Richard Huston, businesses which successfully navigated the Covid-19 pandemic ‘have been able to adapt quickly’.
What’s Been Happening: Souring Risk Sentiment Weighs Down ‘Aussie’
The Pound rose against the ‘Aussie’ last week as risk-sentiment soured and limited the appeal of risk sensitive currencies like the Australian Dollar.
Concerns over the spread of the Delta coronavirus variant, particularly in major economies such as the United States and China, dampened confidence in the global economy’s recovery from the crisis.
Australia’s largest city, Sydney, also reported its highest daily total of Covid-19 infection casts, as the Delta variant spread throughout the nation. This weighed on AUD as concerns grew over Australia’s economic recovery in the months ahead.
The Reserve Bank of Australia (RBA) held its interest rates at 0.1%. Forward guidance on the rate was also left unchanged at 2024, leaving AUD investors concerned about the bank’s cautious approach.
Robert Carnell, the regional head of research, Asia-Pacific, at ING, was however more optimistic, saying that the RBA ‘looks as if they are preparing the ground for an adjustment to this guidance and other policies to bring them more into line with Australia’s strong economic fundamentals.’
The Pound (GBP) benefited from growing optimism in the outlook for the British economy, despite soaring daily Covid-19 infections and underwhelming GDP data.
May’s latest GDP gauge showed that the nation’s economic rebound had slowed in May despite easing of coronavirus rules, while industrial output grew by 0.8%.
Three Things to Watch Out for This Week
- UK Jobless and Inflation Data
UK unemployment and inflation data could provide some uplift for the GBP/AUD exchange rate this week if the nation’s economic outlook continues to improve.
- UK Covid-19 Developments
We could see the Pound head higher this week if Downing Street remains on courses for lifting lockdown restrictions on July 19.
- Australian Unemployment Report
The latest Australian unemployment rate report, due for publication on Thursday, will give a clearer indication of the outlook for the Australian economy. Could rising levels of unemployment see ‘Aussie’ sink?
Pound Australian Dollar Forecast
The GBP/AUD exchange rate could head higher this week if confidence in the outlook for the UK economy continues to grow ahead of the July 19 lifting of lockdown measures.